DEFERRED POLICY ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED

12 Months Ended

Dec. 31, 2014

DEFERRED POLICY ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED.

DEFERRED POLICY ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED

8.DEFERRED POLICY ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED

Deferred policy acquisition costs

The balances and changes in DAC are as follows:

	As of December 31,
	2014			2013
	(Dollars In Thousands)
Balance, beginning of period	$	2,720,604		$	2,493,729
Capitalization of commissions, sales, and issue expenses	293,672			345,885
Amortization	(194,517		)	(112,117		)
Change in unrealized investment gains and losses	(166,694		)	(6,893		)
Balance, end of period	$	2,653,065		$	2,720,604

Value of Business Acquired

The balances and changes in VOBA are as follows:

	As of December 31,
	2014			2013
	(Dollars In Thousands)
Balance, beginning of period	$	756,018		$	731,627
Acquisitions(1)	—			49,643
Amortization	(113,803		)	(42,543		)
Change in unrealized gains and losses	(140,234		)	17,291
Balance, end of period	$	501,981		$	756,018

(1) Includes VOBA associated with the MONY acquisition of $205.7 million, offset by $156.1 million ceded to reinsurers.

As of February 1, 2015, the existing DAC and VOBA balance was written off in conjunction with the merger previously disclosed in Note 5, Dai-ichi Merger and in accordance with ASC Topic 805 — Business Combinations. Therefore, the disclosure of the expected amortization of VOBA over the next five years was excluded.